voidable preference

Voidable Preference

The transfer of assets to a secured creditor less than 90 days before a bankruptcy filing. The voidable preference means one secured creditor is favored over others. After bankruptcy is filed, the trustee in bankruptcy may prevent this creditor from receiving the assets and instead transfer them to another creditor.

voidable preference

In bankruptcy law, the notion that a transfer of property within a certain time period before filing for bankruptcy may be set aside,because it takes property out of the bankruptcy estate and may diminish the money available for unsecured creditors.There does not have to be any showing of fraudulent or dishonest intent.

References in periodicals archive ?
This uncertainty was caused chiefly by the voidable preference provisions in the Companies Act 1993.
At first, it might seem that the rescission theory helps to bail voidable preference law out of a conceptual difficulty that exists in the Bankruptcy Code but that did not exist in the Bankruptcy Act of 1898.
1]'s lien is a voidable preference, within the meaning of Bankruptcy Code [section] 547(b).
1] has violated the spirit of creditor equality that lies behind voidable preference law.
1]'s alleged judicial lien on X's property was really a lien on D's property-hence a voidable preference.
There may be a question as to whether such an option should be deemed a voidable preference.
States that have enacted versions of the Uniform Act typically have enacted a voidable preference provision that permits a receiver to avoid any pledge of assets made within a certain period (in some cases up to one year) prior to commencement of the receivership if the pledge was made with the intent of giving a preference and the creditor had reasonable cause to believe that the preference would occur.
i) to allow a non-debtor swap participant or the trustee to terminate a swap agreement so that a swap agreement could only continue after the bankruptcy is filed only by mutual consent of the non-debtor swap participant and the trustee; (ii) to permit immediate termination in order to minimize exposure to market volatility; and (iii) to address the need for swap participants to be able to close out existing transactions without fear that (a) closing out swaps would violate the stay, (b) a debtor would opportunistically reject unfavorable swaps and assume favorable ones; or (c) the transactions would be challenged as voidable preferences.
Bankruptcy prediction models, voidable preferences and fraudulent conveyances are each covered in this chapter.
These measures dealt with voidable preferences in bankruptcy law.
But Hardy shudders to think what would have happened if a large insurer had gone into liquidation under the original interpretation of voidable preferences.
A check for voidable preferences or fraudulent transfers likewise yields nothing of consequence.